Congress has declared the third week in October to be ‘National Save for Retirement Week’ in order to educate people about the importance of saving for retirement. In honor of NSFR Week 2016, we are going to walk you through your road to retirement, decade by the decade.
Ah, your 20's. Finally out of school, having disposable income, and figuring out what you want to be when you grow up. Although you’re just starting down your career path, it’s important to start thinking about retirement. Yes, retirement, that day 40+ years in the future.
In Your 20’s:
ENROLL IN A 401(K)
There are two basic types of a 401(k), a Traditional and a Roth. In a traditional account, the money is taken out of your paycheck pre-tax. Once you retire, you will pay tax whenever you withdraw money. With a Roth account, the money is taken out after taxes, meaning all of the money is yours to keep after retirement.
BUILD GOOD CREDIT
If you’ve never had a credit card before, now is the time to get one. Consistent, on time payments in full will help raise your credit score over time. Just remember to never use more than 30% of your credit line at one time.
START PAYING OFF DEBT
Chances are you graduated school with student debt. Start with the debt with the highest interest rate and then work your way down. The sooner you start paying off these high interest debts, the more money you'll save overtime.
SET FINANCIAL GOALS
You need to know where you’re headed in life before making any major decisions. By setting goals early, you can create a budget that can help you reach these goals, but still allow you to live a life you want.